Colling, Gilbert, Wright & Carter Securites Fraud

According to an article in today's New York times, senior officials from the Bush administration and the Federal Reserve informed top executives of Fannie Mae and Freddie Mac, the mortgage-finance giants, that the government is preparing a plan to seize the two companies and place them in a conservatorship, officials and company executives briefed on the discussions said.

This is just the latest fallout from the credit crisis that has toppled financial giants IndyMac and Bear Stearns. Mortgage backed securities have wiped out billions in investor capital due to the dramatic declines in short term bond and income funds, such as those managed by Charles Schwab (YieldPlus), Morgan Keegan (RMK Select Funds), Wachovia Evergreen (Ultra Short Opportunities Fund) and Fidelity (Short-term Bond Fund) investments. The credit crisis has also tied up billions of investor capital in Auction Rate Securities (ARS. Only in the past two weeks have regulators worked out a deal with ARS issuers to redeem the paper and give investors the liquidity they were promised when they were sold the ARS. Those firms include Morgan Stanley, Citigroup, JP Morgan Chase, UBS and Merrill Lynch.

There could be more trouble on the horizon for major banks and brokerage firms and some financial commentators have speculated another giant may fall. Investors should examine their holdings carefully and make sure they do not have exposure to subprime paper, mortgage backed securities and other structured product. If your not sure, contact our office for a free consultation.